Although still under sporadic criticism from regulators, legislators and customers, Pacific Gas and Electric Co. (PG&E) and parent company PG&E Corp. are developing a new playbook, including updated wildfire mitigation plans.
CEO Patricia Poppe during a fourth quarter conference call Thursday said the mitigation plans were moving to risk-based from activity-based. They would address the highest risk areas in its service territory with an “enhanced, predictive” model using state-of-the-art technology.
“I feel good about our ability to build a transparent system so anyone who wants to can be aware of the status of our wildfire mitigation plan,” said Poppe, who came aboard two months ago. “I’m finding incredibly talented people here; they just need a process and a system to make our commitments visible….
“We’re comfortable with enhanced regulatory oversight, and I wouldn’t be surprised if more is initiated,” Poppe said. The California Public Utilities Commission “has a job to do, and we welcome the visibility.”
Most of the initial playbook should be available by mid-year, and it would continue to be updated and improved. “That is in the spirit of what I call ‘lean operations’ because we’re never going to be satisfied. It will be ever-in-evolution,” she said.
Poppe also introduced new executives, including COO Adam Wright and Senior Vice President Joe Forline, who heads natural gas operations.
Poppe said the San Francisco-based combination utility has spent so much time responding to crises, “there has been a loss of the ability for senior management to focus on the horizon to get focused on the future and the clean energy transformation, and how that transformation overlaps with wildfire prevention.”
The combination of new technology and “the right engineering team” can mitigate the multiple risks for the huge utility. PG&E is now seeking a senior executive-engineer to lead that effort.
The former CEO at CMS Energy Corp. in Michigan, Poppe said she is impressed by the “components” of the state’s regulatory regime because of its long-term certainty of revenues with various balancing accounts to provide flexibility over shorter time periods.
“We still have to do what we say we will do,” she said. “My ‘wishlist’ is that we will be reliable again and our word will stand.”
In related news, a lawsuit was filed Wednesday in a California Superior Court in San Francisco by wildfire victims who were a part of a 2019 settlement for $13.5 billion. The settlement allowed the victims to go after former executives and board members named in the lawsuit. If successful, the victims could be entitled to up to $1 billion in additional payoffs.
“PG&E has already contributed the vast majority of the agreed $13.58 billion to compensate individual wildfire victims, and we are aware of the lawsuit,” spokesperson James Noonan said.
Also on Thursday, the California Public Utilities Commission proposed placing PG&E into the first step of an “enhanced oversight and enforcement process.” The proposal is based on the utility’s alleged failure to sufficiently prioritize clearing vegetation on its highest risk power lines in 2020. The five-member panel will consider the proposal on April 15.
In placing PG&E into the enhanced oversight process, the CPUC will require corrective actions intended to ensure PG&E continues to improve its safety performance. CPUC’s Wildfire Safety Division found that in 2020 “PG&E failed to clear hazardous vegetation from power lines that posed the highest wildfire risks,” according to the report.
PG&E reported income of $200 million (9 cents/share) in 4Q2020, compared with a loss of $3.6 billion (minus $6.84) in the same period in 2019. For 2020, there was a loss of $1.3 billion (minus $1.05), compared with losses of $7.7 billion (minus $14.50) in 2019.
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